The salary gains of young adults with higher education compared to those with only secondary education are declining and are at “historic lows, falling from about 50% in 2011 to 27% in 2022,” according to the “State of the Nation” report. on Education, Employment and Skills in Portugal” by the José Neves Foundation (FJN), published today.
“If in 2011 a young adult (aged 25-34) with a higher education had an average salary that was about 50% higher than that of a young adult with a secondary education, in 2019 this difference had decreased to 32%,” says to the analysis of the FJN. With the pandemic, the pay gap would widen again by about five percentage points in 2020 and 2021, but then the downward trend returned. “In order to overcome the pandemic crisis, wage growth in higher education compared to secondary education fell abruptly to 27%, due to the different magnitude of the wage decline in real terms of these two groups,” the FJN points out in the report . That is, the wage gains of college graduates compared to those not pursuing studies after secondary “fell to just over half of those recorded in 2011.”
An evolution that is not unrelated to the loss of purchasing power in Portugal last year. While nominal wages rose by 3.6% in 2022, real wages fell by 4% due to rising inflation. “The impact was felt by workers of all levels of education, but very pronounced among qualified young people (-6%),” the study by the José Neves Foundation points out. Young people aged between 25 and 34 with a higher education only saw their salary increase by 1.4% last year, from 1046 to 1061 euros, which, adjusted for inflation, translated into a loss of purchasing power of 6%, the highest in the population , regardless of their qualifications”.
Between 2021 and 2022, people with a secondary education achieved an average nominal wage increase of 16%. That amounts to an equal real salary in those two years, about 920 euros, according to FJN accounts.
“It is indeed necessary to increase the productivity of companies in order to get back to paying better wages, but regardless, and although this gap has abruptly decreased during this period, it always compensates to have more education, from the salary standpoint,” he tells the DN/Dinheiro Vivo the FJN’s executive president, Carlos Oliveira. All the more so as the data also indicate that within higher education, the average wage increase of those with a master’s degree compared to those with only a degree has increased from 10% in 2011 to 19.3% in 2022, “the highest value recorded ever registered,” the report highlights.
The data also shows that it was easier for young people with a higher education to find work after the pandemic. The post-pandemic unemployment rate recovery was complete in 2022, against the 18% unemployment rate seen among those with fewer qualifications. “Even among the lower educated, who will also be the youngest of this group at the start, the unemployment rate in 2022 was still significantly higher than in 2019: 13% in 2019 and 18% in 2022,” emphasizes the FJN.
“We also see here the importance of measures for the qualification of young people and the alignment of these qualifications with what the labor market is looking for,” emphasizes Carlos Oliveira.
Digitization potential
This third edition of the “State of the Nation on Education, Employment and Skills in Portugal” also focused on the digitization potential of national companies. We witnessed greater digital intensity during the pandemic, but at the end of last year this was already in line with the upward trend we saw between 2017 and 2019.
For example, in 2022, Portugal occupied 16th position in the arrangement of the European Union countries with the highest share of employment in technology and knowledge-intensive sectors, although, as the report says, it falls “well below the five European Union countries with the highest share of employment in technology and knowledge-intensive sectors.” knowledge-intensive industries, which had an average of 57% in the same year”.
The FJN’s analysis guarantees that digitization will “continue to grow faster than expected over the next decade” but cautions that there is still huge potential in this area to be explored. Both at the level of companies – 48% have a low degree of digitization – and employees. “Four in 10 have jobs that don’t use digital technologies or have very simple use.”
Carlos Oliveira goes further, stating that “four out of ten Portuguese adults lack basic digital skills”. “At a time when this is in fact a fundamental issue, we still have a significant portion of the population that does not use these technologies in their work or do not have the skills to use them,” the official lamented, pointing to the existence of “an enormous need and opportunity”. “Most digital companies are effectively paying their employees better wages, are much more productive and are better able to withstand the pandemic,” he says.
The foundation’s executive chairman also says that a company with an average digitization index has about 20% more productivity than a company with a low index.
Also in this indicator, the report states that it is necessary to “accelerate the training of the Portuguese to respond to the employment of ICT specialists, which grew five times faster than that of general employment between 2014 and 2021”. At the same time, greater integration of women is needed, who are currently under-represented in increasingly digital professions. “For every ten percentage points of a company’s digitization index, this is reflected in a 4.5% increase in salary, also on average,” says Carlos Oliveira, who calls the digital transformation in companies a “virtuous cycle” as it culminates in higher wages which ultimately makes the companies mentioned more competitive.
However, the use of digital must start in education, says Carlos Oliveira, recalling that only a minority of Portuguese use digital technologies in school learning. This is largely due to “an education system that still cannot accommodate methodologies or curricula adapted to the availability of these technologies”.
According to the official, this refers to the need “for the country to look at education once and for all in a strategic way and not just at cyclical issues, important as they are”. And it justifies it with the 18% decline in teacher education. “Portugal has the oldest teaching class in the European Union and despite the fact that enrollment in undergraduate courses increased by 8% between 2013 and 2021, there was a decline in those giving access to the teaching profession, and this has affected many to the lack of attractiveness of the profession for young people”.
Carlos Oliveira argues that it is imperative that the national education system is not the same as it was in the 18th century and that more innovation is needed in education in Portugal. “We need to experiment with new systems, new modes and new methodologies and the national education system needs to learn and understand how to integrate innovation into the system faster.” Only then, he says, will Portugal have an education system that gives the Portuguese the skills that will enable them to have a better future and a country that is evolving.
In summary, FJN’s manager concludes, a vision of change and a medium and long-term strategic vision are needed to do everything now in line with a much better defined strategy for the future.
Mónica Costa is a journalist for Dinheiro Vivo
Source: DN
